What is 'Gen-Saki'

Gen-saki is a secondary bond market in Japan, also known as a repo market for its similarity to repurchase agreements. Gen-saki trading involves the buying or selling of bonds with a deal to buy or sell them back after a specified period.


Gen-saki translated into English means “present” (gen) and “future” (saki). Gen-saki is used for the purchase and resale of medium-term and long-term corporate and government bonds. The gen-saki market evolved in the 1950s because there was no secondary market in Japan for treasury securities issued by the Bank of Japan. Gen-saki is open to corporations and financial institutions. Until 1979 it was also open to foreign investors in 1979. Gen-saki transactions are available for any maturity dates up to one year, but most agreements are within three months or less. When setting the gen-saki rate, the yen London interbank offered rate (LIBOR) is often the basis, because it accurately reflects the deposit market rate.

The move toward gen-saki trading in Japan represents a step toward the international standard in repurchase agreements. Traditionally, Japan had used a “gen-tan” repurchase model, which uses cash as lending and borrowing collateral. The gradual move toward gen-saki trading in Japan is improving market efficiency and shortening the settlement cycle. Many believe its adoption, fueled by advancing technology, represents a significant growth opportunity and could result in future structural changes in Japan’s money markets. 

Examples of ‘Gen-Saki’ Transactions

There are three types of gen-saki transactions: own-account, consignment, and direct. Own-account gen-saki is when a securities firm sells a bond in its possession with a repurchase agreement for funding. Regulations were imposed on the amount of total outstanding own-account gen-saki in 1978 to ensure market safety and encourage sound management of securities firms.

Consignment gen-saki are repurchase agreements under which the bondholders, who are not securities firms, carry out a gen-saki transaction through securities firms. In other words, the borrower will sell securities with a repurchase agreement to the securities firms, and the securities firms will sell the same securities with the same date on its account to another buyer in the market, such as a corporate business or a financial institution with surplus funds. These transactions do not cause a change in the balance of security inventories in the securities firms. Limits on total outstanding funds in consignment gen-saki were introduced in 1974.

A direct gen-saki transaction is between a bank or other financial institution with surplus funds and a buyer, which could be a corporate business.

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